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Mad Money

News/Business. (2012) New.

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480

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Us 11, Cramer 9, Darden 7, Deckers 5, Apple 4, Transocean 3, Jim Cramer 3, Massmutual 3, Ensco 3, China 3, America 3, Washington 3, Florida 3, Warren 3, Kelsey Warren 2, Jim 2, Europe 2, California 2, Chipotle 2, New York 2,
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  CNBC    Mad Money    News/Business.  (2012) New.  

    September 26, 2012
    6:00 - 7:00pm EDT  

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me. that's why every year right at this time, i like to atone for my bad calls in keeping with the day of atonement. in order to learn from what i did wrong and hopefully earn your respect for what i'm trying to accomplish here on "mad money." even when i don't get it right. there are always going to be calls that don't pan out the way we expect it, but good investors, then capitalize on their mistakes by studying these blunders to minimize the chances of those costly errors repeating themselves. so tonight, i'm going to reminstrate to demonstrate by examining a bad number of calls i have made on "mad money" in the last year. explaining why they occurred, what went wrong, and what you can still do about it to temper the severe decree and make things better. before i get into specifics, though, let me give you a sense of what i see are the biggest kinds of errors over the last
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year as i review things and how i will vow to try not to make them. even different ones that pop up to haunt you. first of all, this is a humbling market. the last 12 months have been filled with instance after instance that should have destroyed the stock market. taking it back somewhere near the generational lows. all right. let's think about all the problems we've seen. we had crisis after crisis in europe, involving the potential implosion of countries let alone the gigantic and reckless banks. everything from national treasuries to huge financial institutions. and it's repeatedly threaten to trigger a lehman brothers-style crisis. we've had total gridlock in washington. and now face tremendous decline in federal spending, the fiscal cliff, i think you should call it a fiscal wall which when coupled with a hideously high unemployment rate could throw us back into a recession. it wouldn't surprise most people who did that given we haven't dipped below 8% unemployment,
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remarkable given how long it's been since the actual crash. we have a federal reserve so exasperated with the inability to get the economy moving, it's taken the position of saying it's going to stay accommodative, meaning continuing to print money even as it looks like the economy is turning around. that's the exact opposite of a mandate to take away the punch bowl once the party gets started. now ben bernanke is going to keep it flowing for as long as it takes. we could be for three days. plus, one more unthinkable, a slowing chinese economy. the great engine of growth that has supported global commerce for years. >> all aboard! >> including the darkest days of the great recession. and what's happened? the stock market never quit. never stopped climbing, it has a remarkable run with almost every sector leading the charge at one time or another, the great rotation. and before i go into the by
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remistations for the evening. i told you not to waver, to stay the course, the slowdown against china, and the growth that is the united states. the diverse portfolio of high-quality stocks, income producers, and growth stocks with solid dividend boosts. and of course, some gold. these have all been the correct calls to make. i've stuck with it because i believe the europeans are not suicidal. so far, so good on that front. i believe the chinese economy will simply come back by the virtue of the fact there is still tremendous urban migration within china. i believe the accommodative stance will serve as a bridge over a troubled fiscal cliff and will not take us down. at the same time, the fed's stance will continue to make higher dividend-paying companies in to gems that will all speak as a way to generate income. we'll continue to want to buy the stocks of cash-rich countries with yields that well exceed treasuries. and yes, we're going to want to own a lot of gold, specifically
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because there isn't a nation that doesn't want its currency lower in order to spur growth. you need a real reserve currency, not the dollar, and that reserve currency is gold. also not to toot my own horn too hard, but throughout this period, i recognized the particularly good stocks. whether it be the strength of bigger banks and telco wells fargo and verizon come to mind. and you must own, not trade, but own apple. until it gets to be too expensive versus the growth rate and the average stock and it is nowhere near that yet. okay. all well and good. you've now heard pretty much everything, everything. you've heard the last of what i've done right over the last 12 months, at least for this evening. and while i can already see the youtube about how cramer himself admits he's always getting things wrong, i thought for posterity i should lead with something more positive about "mad money." when i look at the hard youtube clips you produce, i can remind myself, hey, knuckle heads, didn't you hear about the stuff i got right?
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i'm going to give you specific examples of mistakes i've made in a true day of atonement fashion. it is ant all about blown judgment. most of the things i do wrong these days aren't rookie mistakes. it's very rare now that i suggest a quick trade that then goes awry because anyone who has watched the show over the years knows i've moved away from trading, i'm trying to get you to invest in stocks. my mistakes rarely have to do with the not doing of homework. these days, i'm doing more and better homework than i did with miss hedge fund with a terrific staff of savvy people who have been with me for a long time. no, if anything, it's the opposite of rookie mistakes i'm making. call them veteran mistakes. my errors seem to be rooted in overconfidence and judgment and too much belief in what has worked so well before it has to work again. they are blunders i make because i sometimes feel like i've seen this movie before and i know how it ends, when the great challenge means in reality it's more like a closed event where you don't know how the outcome
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will be, and when you're sure you do, that's when you get the big upset. but the worst errors i've made have to do with trust. either by being too trusting or not trusting enough. i've trusted way too many executives who told me not to worry, say about apple's dominance, it isn't all that pervasive. or wouldn't need to raise capital and they did soon after being on the show. told me not to worry about a particular cycle, they could buck it and then they couldn't. and then there are other managers i didn't trust, execs who perhaps upon closer review deserved a second look and a little more credit and something i'm going to give them tonight because they too have changed, maybe changed for the better. most of all, though, i do this night of self-criticism show every year to remind you that while i come out here daily to try to get it right, i am only human. and i fell prey of all the misjudgments humans fall prey to. i warned against greedy but suggested you stay in chipotle long after it was time to sell. i was drawn to a couple of
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speculations. and when they went lower no matter how many times i told them you could only buy them if you saw they were speculative. that was my job to make sure you didn't feel that way. worst of all, i didn't believe in myself in my own work so often that my own frustration led me astray when i was right and the market was wrong and left the winning table way too soon for me and for you. here's the bottom line, if you want to be credible, you have to get rid of the incredible. and it would be incredible if i would be right every night or at least claimed to be, although i did nail the big picture over the last year. sit back and watch me atone for my investing sins and beg for your forgiveness without too much of a whooping, please. so we can both learn from our mistakes and profit from them. i need to start the calls by going to ed in texas. ed? >> caller: boo-yah, jim, from ed in houston. >> boo-yah. >> caller: i have a question about the fed's zero interest rate strategy. it seems that uncle ben has
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pushed all investors in the stocks these days. they're buying everything, dividend payers, nondividend, icap, low cap, even the pure junk. i can see the merit in buying the high-quality dividend payers as you have suggested. but it says that just like the growing split in our country's rich and poor, the lower quality, nondividend stocks may soon break from the pack falling hard and fast based on their fundamentals. >> it's funny, ed. david faber and i kick this around all the time. we often say that wouldn't it be great if bernanke's going to force us all in to stocks and gave us rules for which stocks no the to buy. i totally agree with you. it's a willy nilly move in the stocks, a lot of stocks go up, that is a shame, that's what i call collateral damage to a policy that i think will get us out of this rut. cat in florida, kat. >> caller: hi, jim, you think the presidential election this year might affect the movement in the stock market. >> well, i care far more about
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who wins congress. it's not going to be able to do anything. but if congress goes all democrat, then you're going to want to be able to -- you're going to trim back the dividend stocks because you will have to pay higher taxes on dividends. tom in california? >> caller: boo-yah, jim. thanks for your help. my issue is several stocks i have followed have suddenly taken a 3% dive and i read later that day that the company is making a public offering. >> right. >> caller: over the next several weeks, the stocks have frequently rebounded. any question is, is this a pattern you think we can count on and try to exploit? >> yes, this is a pattern that is going to happen. and i'll tell you why. there are still a lot of companies that want to expand and they've got a lot of credit, but they have higher credit lines, higher interest. they pay down some of that with equity, with the money they raise and then they get a better credit line. i think you're going to see a lot from the real estate investment trust industry and the master limited partnership.
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my favorite mistakes. well, nobody likes mistakes. but in the wild world of investing, nothing could be more valuable than the hard-learned lesson. so sit back and let's learn and become better investors. >> don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer #madtweet. send jim an e-mail to "mad money" at cnbc.com. or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. [ male announcer ] when this hotel added aflac to provide a better benefits package... oahhh!
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♪ who let the dogs out ♪ who let the dogs out in the market, just like real life, failure is a brilliant teacher with fabulous fringe benefits as j.k. rowling tells us. not to be cliched, you should always remember that even dogs have their day. when you've hated a stock with good reason all the way down and you've been right, don't push
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your luck because eventually that dog's going to bite you. in other words, when you're saying a stock is a sell, sell, sell, and it gets slaughtered day after day, at a certain point, you have to know when to declare victory and move on. that's the lesson of first solar. another piece back in may, i zeroed in on why i thought first solar was a value trap, meaning a stock that gives you the appearance of being cheap but it's going much lower because the business is in long decline. i was feeling good about myself about that one. yeah, i had been so pumped because i thought you should get in at $138 and all the way down to $60, $50, $40, and $30. and i thought it would go down to zero. that's why i couldn't resist issuing one more sell call. i said it was quote untouchable. as it depends on subsidies and those were going away. without those subsidies, i would say those products were too
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uneconomic to buy. i also dismissed the tariffs the chinese solar import. even as it was a major 31% tariff that made it so first solar was more competitive. plus i dismissed the importance of green energy to germany no matter what in a tight pinch of budget. and orders kept coming through even as the total allocation got cut back. next thing you know the company is winning a slew of domestic orders, and the stock, it doubles. yep, i was wrong about the stock being a value trap, but i underestimated the positive impact on the tariffs on first solar's business, but most important, i had a huge home run telling you to get out at $138. why didn't i declare victory when it fell to 1/10 of that level? why be as greedy on the short side as a stupid buyer is on the long side. i arrogantly failed to practice my mantra. my mantra is that bulls make money, bears make money, and hogs, they get slaughtered. i was no longer just being a
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bear on first solar, i was being a hog. and i blew it. first solar was it $13, i should have changed my mind. given that the stock is down more than 100 points where i told you to sell it, it is never too late to declare that kind of victory. that's what i'm doing tonight, as well as my need, my prideful need to reiterate my sell on first solar when they were only 13 points to the downside left to the name. the business is not as horrible as i thought. no reason to buy it, but no reason to hate it anymore either. is it a terrific situation? no. was it a value trap at 13? no, no more than darden was a value trap. the parent company of red lobster and olive garden belonged on the sell block. i kept thinking they have to get back together. i love to eat at the olive garden. it's usually too crowded to get into most sundays and even better on route 2 on 202, forget about it. very few night are as fun as
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oktoberfest and red lobster, the beer is to die for as long as you aren't driving. but i got exhausted by the change after many months of subpar performance, darden preannounced a worse than expected quarter, they said they'd do 78 cents, i'd had enough, especially to olive garden which represents 50% of the company's profits posting a 2.9% decline. i suggest you swap out of darden even though it was yielding closer to 4%, and told you to get to yum brands. i could pat myself on the back of this one for rallying 20 points, however, darden advanced gaining about 14 points on a $43 basis, roughly 30% run. there are several lessons to be learned. when you own shares in a company that's easy backed up by cash flow, you can afford to be patient and wait for a return. right? no matter what, they're paying you to wait. even if a turn doesn't occur and i could argue it hasn't done all that much, you didn't need to
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throw the towel in at the same time everyone else did. darden isn't all that much better, be the stock has become more attractive as a reinvestment dividend at a time of low interest rates meaning the competition from bonds is small plus a possibility of a turn, major turn, not just the little one we got and at some point in the future does matter. recently talked about increasing the earnings by 50% over the next few years, something wall street loved. the company then followed with a good earnings report that showed a reacceleration in the olive garden division. still waiting for red lobster. but i should have known not to give up when everybody else who gives up is almost always a rookie mistake. the balance sheet's good and the brands are beloved. the moral of the story, even if you hated darden, there was a much better time to sell. so be careful of asserting something's a value trap simply because you feel trapped. sometimes there's value and takes time to bring out. as long as the cash is there and the company's making money, it's worth waiting, especially when you consider that i never
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stopped going to olive garden myself and still wearing the old cargo pants when i go so i can stuff small rolls in there. the never ending bowl of salad, how can i not like it? every time i go there, i give them a real beatdown. bottom line, even dogs have their day. know when it's time to declare victory with a sell call. and recognize when you sell like i told you to do with darden. after the break, i'll try to save you more money. now, that's what i call a test drive.
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let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students. let's solve this. a big staten island, new york, hey now, forget about it, boo yaw! boo-yah! >> california -- >> georgia. >> boo-yahs come from all across america, let cramer help you channel yours. "mad money" with jim cramer weeknights on cnbc. ♪ ♪ why do birds -- >> all night, i'm highlighting my biggest mistakes from the
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last year and not to punish myself, but because i believe the only way to become a better investor is by acknowledging your screw-ups and learning from them. i can't exist. we isolate what we did wrong, though. we atone, we adjust, and we are all the better for it. that's the "mad money" way. and let me tell you, as much experience as i have, as long as i've been doing this, you're never too old to make the classic mistake, classic mistake of falling in love with a stock. which is too bad because it's one of the quickest ways to wreck your portfolio. so here's a cautionary tale, a love story, my bad romance with chipotle. not to totally mix diva references, but that stock warns us at the end the day i first met you, you told me never fall in love. and yet did i listen to demi when it came to chipotle? no, i fell in love in a way that makes me angry at myself to this
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very day. i felt like my head hit the concrete to get a third diva in there. here's my background with chipotle. i have two vegetarian kids, they abhor traditional fast food. but because it's organic and they like a big healthy meal, my daughters like nothing more than chowing down on a vegetable burrito from chipotle. 279 points and i quickly adopted it as my own. i love the food, the service, the uniformity. most of all, i admire the company for trying to do the things right with food encouraging a healthier way of eating. you know i got a phenomenal history of going with the gut of my kids when it comes to the stock. when panera was in the 40s, my daughter wanted lunch. i said where do you want to go? which was panera. why did it have to be panera? because they have the healthiest salad, she says. the whole team eats there. she liked the chicken caesar with no chicken, no tomato, hold the dressing. what can i say? there's no accounting for taste. a home run that turned out to be
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the stock's now 120 points higher. how about apple? some 650 points. wow. when i bought my youngest her second ipod, i found out they were fashion accessories. how could you beat that? like jewelry but more valuable. who has one necklace or bracelet she reminded me. i stuck with it all the way up. hey, dad, i want the new ipod, itunes -- i want the 4s, the ipad, one and two. no, they didn't get all of them. i'm not in to spoiling, although i'm not in the 47%. so i got comfortable with the idea when my kids like something like panera, like apple, i could be on a really on to something really tremendous. nevertheless, what they are not on to is valuation. you see panera never really did get as expensive as others, apple still selling below market multiple. apple sells for less than the
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average stock. but chipotle, man, i liked it for years and i believe it had to grow to the sky. it was a perennial double-digit grower that only got slightly dinged in the great recession. there was more to the story. international, just beginning to roll out in europe. i was hearing stories in lines around the block. second, i like the concept of the southeast asian noodle kitchen in washington, d.c. and even though when i visited it and found the food okay, i figured they'd get the kinks out quickly and develop this. hey, two great themes for the price of one. again, i was struck by the sensitivity to vegetarians too and taking my kids there, i suspended my judgment about liking it i decided they'd figure it out quickly. third, i loved the video chipotle made that they were the polar opposite of so many fast food companies. i thought about them in the same way as whole foods, comfortably above the fray. i also figured that the value
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cops couldn't catch chipotle. it was too swift and too perfect, never waving and never wildly accelerating, and then breaking like some drunk driver on the jersey turnpike. that gets his license take away. that's why i could justify people buying chipotle for slightly more than twice of its growth at 22%. 45 times earnings, which is what the stock got to not long before it stabled 100-point decline day, 45 times earning. and what happened on that down day? they revealed it decelerated from 12% to 8%. and the earnings would not be as robust as we thought. suddenly it didn't matter too much. we didn't care about the noodle thing going on at dupont circle, washington. all that mattered was the
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same-store sales when it had been 12%, and chipotle's management suddenly telling us that the weaker economy had caught up with them. huh? what? i always thought they were immune to these issues as the economy and consumer spending. we were in chipotle because we didn't want to worry about that. i was wrong. they weren't wrong, i was wrong. i violated lavato, i was in love. when it was acting funky a bit in the 400s, i said perhaps if something went wrong you could be stopped out at perhaps 3.50, which was 70 points below but well above where it went to. doesn't matter, i got carried away by the consistency of management, my daughters' love for the food, and how right their judgment had been in so many cases and therefore my judgment was right. what should i have done? well, i should have said, you know what? i like chipotle very much, but when it's trading at slightly more than twice the growth rate,
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that breaks the rules. and in the end, they are just making burritos. they may not be causing cancer like the other guy, but they ain't curing it either. trying to figure out where the stock is cheap, not where it is sitting too horribly expensive. the latest run for the bottom, i'm inclined to say let's wait and see even though i hear things are better and deep in the money calls have become the only way to play chipotle because any stock can go down 100 in a day is one where it's become too risky to own. better to pay up, take premium, give yourself the downside protection deep in the money calls give you. by the way, while we're talking about stocks where i suspended my skepticism and overstayed my welcome, i might as well mention deckers. to be fair, i didn't get deckers that wrong, the stock, made us a ton of money over the years and when the concept broke down, i told you to sell the stock in the 80s now trading in the low 40s. i timed it okay, but i should have told you to leave much
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earlier much higher. now back in december 2010, i let my enthusiasm get the better of me and declared that uggs were not a fad, not a fad. after that, deckers did run up 35 points, not bad, and then it peaked, given up 75 points when it turned out, yes, indeed, while they had staying power, their growth was fad-ish. it was a fad nonetheless. had i simply owned that and said, listen, the day will come when i have to leave deckers, i would exonerate myself. but i was too confident and whatever points were, i gave up by not suggesting perhaps you would have to get out when there were signs and there were ample signs the fad was coming to an end. here's the bottom line, take a page from demi lavato and never fall in love. you end up with mistakes like chipotle and deckers, and those are not the mistakes you want to make twice.
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jeff in florida. jeff? >> caller: hey, boo-yah, jim from the heart of the i-4 corridor in florida. >> man, one of my favorite areas, there's a crystal right there. what's going on? >> caller: oh, yeah. with the iphone 5 now out, everybody discovering that the things they bought with the old iphones don't work anymore. they changed the plug. i'm looking for something i can get in to that would complement that, you know, speakers, docking stations, whatever. what kind of stock can you recommend? >> the ancillary apple plays have been to say the least dodgy. i heard some british guy say that the other day, i was going to incorporate it. and what i think is you've got to stick with apple. the ancillary plays are too ancillary and not responsive to the stock itself. sal in new york, sal. >> caller: hey, jimmy boy, boo-yah to you. i have a question about the premarket and the after market. >> sure. >> caller: usually the news comes out late in the day like 4:00 or 5:00.
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>> mm-hmm. >> caller: and we get hurt from the aftermarket and the morning comes we get hurt again. how do i protect myself against this? >> there's nothing to do. you can do deep in the money calls, you don't have the big downside. but the advantage to trading in after hours, they're losing money. most of them are losing money. maybe one or two guys get out, everybody's getting pounded like you. let's not sweat the program. let's not sweat the program. give your heart and the portfolio a break. don't fall in love with stocks. don't be blind. investing is about money and cold hard facts not your heart. stay with cramer. stay with cramer all day long and tweet your questions. bob...
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oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners. [ "the odd couple" theme playing ] humans. even when we cross our "t"s and dot our "i"s, we still run into problems -- mainly other humans. at liberty mutual insurance, we understand. that's why our auto policies come with accident forgiveness if you qualify, where your rates won't go up due to your first accident, and new car replacement, where if you total your new car, we give you the money
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while we're on the subject of mistakes i've made over the last year, we need to talk about trust issues. sometimes i'm way too tough on management and sometimes i give executives too many free passes. tonight i want to examine two situations where i did wrong by
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trusting too much in one case and too little in the other, i want to rectify. back in june, i got tired of the serial disappointments coming out of proctor and gamble, the lack of toughness. they're all part of bob mcdonnell's regime. i said he turned it into a gamble. i couldn't resist saying that, it was only fitting, mcdonnell belonged on the wall of shame. where he could bring out value in the stock only by leaving the company. but now i'm thinking that judgment will no longer hold up under close scrutiny. yes, he did take his forecast down twice. yes, the stock had done nothing for most of his tenure as ceo, and yes, they had all been taking share. no longer, though. mcdonald's no dope, and frankly you don't get to run one of the largest corporations on earth by having a moron at the top.
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no. he saw what we all saw back in february mcdonald announced a $10 billion cost saving initiative. and my reaction to that was to say how could he have allowed so much fact to begin with? the stock languished after i put him on the wall of shame. but the more research i did, the more i realized the $10 billion in cost cuts were necessary because of the previous regimes, not mcdonald, where assets were piled on top of other assets. and mcdonald, turns out, isn't such a softy, he's been true to his word and now well ahead of his $10 billion target goals. mcdonald has made changes, done them quietly to the management of underperforming divisions. he's not a guy just throws out heads. he's introduced new products, like special doses of pie called pods taking an amazing share back from the other guys in no time. one of the most remarkable transformations i've ever seen,
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he's ruled out niche products, called zzzz-quill. asleep in ten minutes flat. mcdonald made a huge bet on the olympics with a series of ads that helped augment share gains and kept the new-found momentum going. plus benefitting from two trends that have been head winds but are now tail winds. a change from a strong dollar to a weaker one and increase in the raw goods that go into the products. i don't know if you've noticed, but the stock of p & g has been unstoppable of late and i think that's because mcdonald's plan is working. had to deal with some of the same difficulties that johnson & johnson is dealing with. a legacy that seemed all well and good when he took over, but in reality, anything but. it is my job here to recognize when it's still early enough to matter that i may have been too quick to join the mob of naysayers in which there are
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multiple ones. he is more than willing to accept any blame for things that have gone awry during his tenure. and you know what? they're turning the good ship proctor and gamble around. which is why tonight, i'm taking mr. mcdonald down from the wall of shame. in fact, i'm tempted to buy the stock for my charitable trust, that is, if it ever comes in. have you missed the move? i don't think so. there'll eventually come a day, maybe one or two down days where you can pick up some. but given proctor's buyback, its cash flow, and bountiful dividend, i don't think any downdraft will last very long. the trust will be in there along with you because of the turn that mr. mcdonald is engendering. who haven't i been hard enough on? who have i been too soft on? how about kelsey warren, the chairman and ceo of energy
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transfer partners, the stock i hate the most of all the names on my charitable trust. that's right. he's been on the show many times. this has been a remarkably poor performer, it's 8% plus yield can't even seem to break the fall. why has etp become such a loser? i think it's pretty simple. warren, the ceo seems to be lacking discipline. he keeps buying and buying and buying things, he can't seem to stop himself. piling debt on top of debt, forcing his company to do equity deals like the one right after coming on this show and helping to move the stock higher with the promises of good growth in 2013. talk about shameful behavior. now, i will say this, i'm wary of telling you to sell energy transfer partners right here when my charitable trust has dug in its heels. hoping he'll get the company out of the hole he's dug. i believe the stock can pop. but warren has not been able to grow the distribution. i say he's done the impossible. created an oil and gas pipeline
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company that should've been able to take advantage of all the new finds of oil and gas in the country, like mark west or kinder morgan. he should be raising the distribution while growing earnings right along with the industry. instead, he's given us a stock where we can't sleep at night because we feel the distribution might be at risk. this may be the worst mlp on earth. and i am blaming myself believing in this guy. i'm the chump for doing so. i'm not going to slap warren's mug on the wall of shame just yet. i want to see energy transfer partners pop when the sonoco deal closes shortly. but if it doesn't and warren insists one more horrible equity offering on top of the last one he gassed us with, then this empty space left by mr. mcdonald will belong to him. i don't even like putting these two men in the same sentence let alone the same wall. bottom line, management matters which is why it's important to figure out which executives
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deserve the benefit of the doubt and which ones deserve only skepticism. yeah, i should have trusted bob mcdonald at proctor & gamble, and i should have been more skeptical of kelsey warren. and if i weren't fasting, i would say pass me the crow, hold the salt. stay with cramer.
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there's nothing wrong than making the call and then blowing the execution. getting frustrated or impatient and couldn't wait for your thesis to play out. consider this the classic unforced error i made when it became pretty clear that oil wasn't going to go dramatically lower, i cast out for the ideal oil service stock to ride potentially higher prices. i first thought about halliburt halliburton. but with the discovery of natural gas and no place to store the stuff, no ability yet to export it anywhere, we got incredible portions. we burn off enough natural gas
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to handle the daily power needs of not one, but several major cities. something to think about. with that i recognized that haliburton couldn't and won't have breakout earnings until it's switched over to more oily fields. that gave me the idea of offshore oil plays. and in this space, there are really only two pure plays, transocean and endsco. it looked really good on paper. but rigs fleet was aging and the distressed by the bp spill. i remember reading an article stating that transocean had more to do with the tragedy than bp did. i've always feared the open-ended liability. endsco had all of the good with none of the bad. had a broader customerization including chevron. and taking shares from transocean left and right. contract prices were on the upswing, plus the company got a good deal, someone said it stole pride international.
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i said not only would ensco blow away numbers when reported, but it had a multiple year, multiple year earnings path as clients won't cancel the deep water rigs because it plummeted for a couple of days. the company reports a terrific quarter, oil goes up and next thing ensco rallies around 14 points. it's the time i own my stock for the charitable trust. i thought the story was so fabulous, though, that i got greedy. trust only trimmed a bit of the positions, took very little off the table, even though that is such a huge move and my rules say take at least 25% when you get an increase in price. then out of nowhere, the price of oil plummets, goes down hideously, you know, people can become certain that ensco won't make its numbers, that's how it works. even as the multi-year contracts don't get canceled because of a quick futures downdraft, nevertheless, the stock plummets to $42, and now i have round
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tripped the darn thing. round trip, gave up all my gains. can you imagine? now you've got to put yourself in my head. with the 423 people in there, don't tell the fire martial. all i can think of is if can get a little bit back to even, i'm going to get out of there with a nice big gain. turns out the stock goes to the high 40s and what do i do? i skeedaddle. do i say that the earnings were better than expected multi-year? absolutely not. all i cared about was i made a little profit, now i was done with it. whew, so the next weekend, gets added to the s&p 500 which i heard was going to happen, jumps three points. then unlike so many other stocks, it keeps climbing, goes back to the climb that so terrified me, ten points higher instantly after i sold it. now, if you sit back and ask what i did wrong, it's simple, i
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lost my patience, i stopped caring if i was right or wrong, i wanted to get back to even and a few cents more. the moral of the story is simple, if you have a thesis and it's playing out, don't let the action in the stock dictate your actions. at the same time, though, don't be so greedy you fail to take as much off the table. i am still so angry at myself about this one that i simply took esb off my screen. a fabulous company that was taking names and kicking butt that i simply got impatient with. so i missed the gigantic score. stay with cramer. as the president urges big business on ingenuity -- >> my message is, now is the time to invest in america. >> cramer's on the ground finding the home-grown bulls that are ready to ride. >> this is about made here. this is about made in america and made great. >> "mad money" with jim cramer weeknights 6:00 and 11:00 p.m. eastern only on cnbc.
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no day of atonement show can be complete without a chest beating. since there's still so much to learn every day in this game. let's get to it. how about believing some executives can do no wrong. isn't that what i committed by endlessly praising jamie dimon only to find out now only is he mortal, but arrogant to boot, which is a take away, pointing out some rogue trader in his london office was about to wipe out $18 billion in market cap. remember dimon wants to seek redemption like i do, say no when it comes time to your bonus. for the sin of believing a ceo can be powerful enough to override an entire apple-driven product cycle, that's what i believe when cypress semi was a buy. one unbelievably good steve jobs biography, i would have told you how wrong that was. what else?
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how about for the sin of not forgiving cirrus logic for a miss right before one of the greatest runs i've ever seen. the sound component maker for apple. what a mistake that was. left a lot on the table. just as you can't be in favor of a component that doesn't have apple as a client, you can't bet against one that does. excuses after excuses after excuses for failure, that someone, ceo of miracle grow, don't come on a television and explain how the critics are all wrong and turn around and admit they're right by issuing a hard earnings report soon after. for the sin of thinking that a company had changed its stripes when it was only the ceo saying it had done so. that's what happened in devin energy, which i thought was becoming a much more oily company, but it's truly another natural gas play that wasn't ready for the glut. at least take it like southwestern energy which never pretended it was anything other than a nat gas company.
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for the sin about not believing in my own wrap by recommending. supermarkets cannot compete against the dollar stores. whole foods and trader joes, no one can exist in that fire zone. make it official, roundys, i was wrong, don't own this stock. in march of last year, i told you to buy peabody energy on a play of utility including coal plants, i was too clever by half, the stock was more than cut in half thanks to hostile epa, the glut of natural gas and a slowdown in china. i should have been telling you to sell coal as natural gas is so cheap we may never build another coal plant again in this country. what a great short the coal supercycle was. for these sins and so many others, i ask for your forgiveness. and i promise i will do my best to make fewer mistakes next year as i do every year. but at least alas, i admit that i make them and i hope to temper
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any severe decree you might otherwise give me. stay with cramer. does the market have you stumped? no fear. cramer's here. just e-mail madmoney@cnbc.com. you know what i love about this country?
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trick question. i love everything about this country! including prilosec otc. you know one pill each morning treats your frequent heartburn so you can enjoy all this great land of ours has to offer like demolition derbies. and drive thru weddings. so if you're one of those people who gets heartburn and then treats day after day, block the acid with prilosec otc and don't get heartburn in the first place. [ male announcer ] one pill each morning. 24 hours. zero heartburn. everyone in the nicu, all the nurses wanted to watch him when he was there 118 days.
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everything that you thought was important to you changes in light of having a child that needs you every moment. i wouldn't trade him for the world. who matters most to you says the most about you. massmutual is owned by our policyholders so they matter most to us. if you're caring for a child with special needs, our innovative special care program offers strategies that can help. seconds away on the "kudlow report," mitt romney's dialing down tax cuts. it is a huge mistake. more troubles and violence in spain and greece. why is everyone attacking and
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trying to deny his first amendment free speech right? "kudlow report" is moments away. that was one tough atonement session. i like to say there's a bull market somewhere, i promise to try to find it for you here on "mad money." i'm jim cramer and i'll see you tomorrow. hey, larry, what do you have for us? >> all right, jimmy, mitt romney pulling back on his tax cuts. i have three words for that. wrong, wrong, and wrong. good evening, everyone, i'm larry kudlow, this is the "kudlow report." mitt romney and president obama both hit the trail today as they battle through the key swing state of ohio. but incredibly, romney dialed back his position on tax cuts today. take a listen. >> by the way, don't be expecting a huge cut in taxes because i'm also going to lower deductions and exemptions. >> no meant no. wrong idea. people need a tax break. middle class people need a tax break. i said on this show and wrote in a column, your message should be lower